NZD/USD: Better local equity returns point to kiwi selling in rebalancing flows – ANZ

The NZD/USD has remained on the back foot into month and quarter-end, as the USD finds favour, and markets shy away from the Kiwi good news story. Economists at ANZ Bank expect the pair to edge lower as money managers could adjust their portfolios. 

The third quarter draws to an end, implying last-minute adjustments 

“Markets have clearly judged NZD to be ‘expensive’, and to be fair, a lot of good news was priced in to the kiwi and short-end rates, and the risks do seem to be skewed towards lofty expectations for the economy (and RBNZ OCR hikes) not being fully met, and that’s not a good NZD story.”

“Better local equity returns this month relative to the US point to potential NZD selling in rebalancing flows.”

“Support 0.6800/0.6960 – Resistance 0.7170/0.7215/0.7310.”